Earnings Call Transcript - BNTX Q1 2022

Sylke Maas, Vice President of Investor Relations and Strategy

Good morning and good afternoon, and thank you for joining us today to review BioNTech's first quarter 2022 clinical, operational, and financial results. A few housekeeping items before we start. Please view the slides that accompanied the webcast in the first quarter 2022 press release, both were issued this morning and can be found in the Investors section of our website. As outlined on Slide 2, in today's presentation, we'll be making several forward-looking statements. These forward-looking statements include, but are not limited to, our current COVID-19 vaccine revenues as they include figures derived from preliminary estimates provided by our partners, our estimated financial results for 2022, the continued global demand for our COVID-19 vaccine, our target vaccine production capacity for 2022 and beyond. Our ability to supply our COVID-19 vaccine, the planned next steps in our pipeline programs, the timing for enrollment, initiation, completion, and reporting of data from our preclinical studies and clinical trials, the timing of our ability to obtain and maintain regulatory approval for our product candidates and other risks described in our filings made with the U.S. Securities and Exchange Commission, including our most recent annual report on Form 20-F. As actual results could differ from those we currently anticipate, you are therefore cautioned not to place undue reliance on any forward-looking statements that speak only as of today, shared today during this conference call and webcast. Also, please note that slides 3 and 4 provide detailed and important safety information regarding our COVID-19 vaccine. Finally, you can see the agenda for today's call on Slide 5. It's my pleasure to introduce the members of BioNTech's management team participating in today's call. I'm joined today by our CEO and co-founder, Ugur Sahin; Ozlem Tureci, our Chief Medical Officer and Co-Founder; Jens Holstein, our Chief Financial Officer; and Ryan Richardson, our Chief Strategy Officer. I would like to turn the call over to Ugur Sahin.

Ugur Sahin, CEO and Co-Founder

Thank you, Sylke. Good morning and good afternoon, and a warm welcome to all participants and thank you for your continued support. Today, I'm happy to provide you an overview of the key highlights from the first quarter and objectives for the year. Our team will provide further details, and then we will open the call for questions. Starting on Slide 6. Let me remind everyone about a few features of our company. Our vision is to harness the immune system to fight human diseases. Our response to the COVID-19 pandemic provided us with the unique opportunity to help protect well over 1 billion people with our first approved product. It provided us also a historic chance to accelerate our progress towards our long-term vision to bring the next generation of immunotherapy to patients. With a fully integrated spectrum of competencies for biopharmaceutical drug development covering discovery, translational research, development, GMP manufacturing, and commercial capabilities, we are well positioned for success. We are pursuing a technology-agnostic solution-focused multi-platform strategy and have built an innovation engine that covers various emerging technologies. We are advancing a diversified product pipeline of immunotherapies that aim to address high unmet medical needs in oncology and multiple infectious disease indications. We are building a centrally immunotherapy powerhouse with a mission anchored to our strong sense of global social responsibility. We seek to make a positive impact on global health and democratize access to cutting-edge medicines. Highlights for the first quarter are summarized on Slide 7. Our solid performance continued in the first quarter of 2022, following a strong fourth quarter in 2021. In the first quarter, we reported total revenues of €6.4 billion. We signed our first pandemic preparedness contract with the Federal Republic of Germany that runs through 2027. The framework agreement is aimed at pandemic preparedness, including development, manufacturing, and supply of mRNA vaccines in emerging situations in Germany. During the first quarter, we also engaged in collaborations that complement our internal innovation engine. The Matinas collaboration combines our mRNA vaccine development expertise and Matinas nanocrystal delivery platform technology to advance novel formulations for mRNA vaccines, including a potential formulation for oral vaccines. With Regeneron, we plan to jointly conduct clinical trials, evaluating candidate BNT116 in combination with for the treatment of advanced non-small cell lung cancer. Our impact on human health and economy around the globe continued in 2022. We have invoiced approximately 750 million doses of our COVID-19 vaccines globally in 2022 to the end of the first quarter. In terms of expanding our broader population, we recently received certain approvals. This includes a first dose in adults aged 50 and over as well as in certain types of immunocompromised patients aged 30 years and older. Our pediatric indications now include vaccinations in children aged 5 and over, as well as boosters for those and up in multiple geographies. On the oncology front, our first fibroma program, BLT141 entered a first-in-human study in solid tumors in January. BNT141 is an mRNA-included IgG antibody targeting CLDN18.2. In April, we presented promising preliminary clinical data from 14 evaluable patients in our Phase I/II trial of BNT211, our next-generation Claudin 6 targeting CAR T cells in solid tumors at the AACR Annual Meeting. We documented first antitumor effects even at the lowest CAR T cell dose in heavily treated patient populations, pointing to encouraging activity of targeting Claudin 6 and our CARVac approach. Slide 8. Since the start of the pandemic, we have delivered nearly 3.4 billion doses to people located in more than 175 countries and regions, demonstrating our strong global position in the fight against COVID-19. We remain on track to achieve our pledge to deliver a total of more than 2 billion doses to low and middle-income countries by the end of 2022. To stay ahead of COVID-19, we continue to innovate and optimize our vaccine. This year, we have introduced a ready-to-use formulation that does not require and received approval for a shelf life extension from 9 to 12 months when stored at minus 90 to minus 60 Celsius. To further expand the label to pediatric populations, we have filed for approval of boosters in children 5 to under 12 years old. The filings were supported by recent positive data demonstrating that first dose increases neutralizing antibodies sixfold in this age group. We are also evaluating a dose primary regimen in children 6 months to under 5 years old and expect data in the coming weeks. As part of our approach to pandemic preparedness, we are collaborating in this study on an early warning system that analyzes globally available sequencing data and predicts high-risk variants of SARS-CoV-2. This warning system allows us to rapidly adapt our vaccine product candidate in a data-guided way. As part of our preemptive approach to variants, we have an ongoing comprehensive development program where we are evaluating several follow-on and next-generation COVID-19 vaccines, including variant-adapted vaccines. We also have initiated a research program to study the immune profile after vaccination biomarker and flu infection. This research program is informing our vaccine development strategy. To conclude my opening remarks, as shown on Slide 9, we are building a differentiated pipeline that we believe could usher in a new era of immunotherapy through multiple ways of innovation. Our COVID-19 vaccine program is enabling a transformation of our company that will position us to broaden and accelerate our pipeline towards the market, consistent with our vision to transform medicine. In oncology, we have 16 programs in 20 ongoing clinical trials, including 5 randomized Phase II trials. In infectious diseases, we have 1 ongoing Phase I program and more than 10 preclinical programs, 4 of which we expect to bring into the clinic this year. Our aim is to bring multiple new products in oncology and infectious disease to market over the next 3 to 5 years. We believe that our technology innovation engine has the potential to address a broad set of diseases beyond our current core disease pillar of oncology and infectious diseases. There are multiple programs underway in new disease areas that are in the lead candidate selection phase, advancing our technology into these new areas to expand the future for BioNTech and will support our vision in the long term. With that, I will turn the call over to Ozlem.

Ozlem Tureci, Chief Medical Officer and Co-Founder

Thank you, Ugur. I'm delighted to speak with everyone today and provide our pipeline update. Our COVID-19 vaccine R&D strategy on Slide 11 rests on 3 pillars: landscape research, product research, and product development. Our landscape research elucidates how the virus evolves within the context of vaccine and infection-induced immunity. We are studying how immunity is being shaped over time by iterations of vaccinations, ongoing boosters, and infections with different variants of concern. The data we are continuously generating will inform our evolving response to the pandemic. A recent research study has added to our understanding and may be crucial in the development of next-generation vaccines. These data have been submitted for peer review in a high-ranking journal and published on a preprint server. In the study, we evaluated the sera of individuals who had breakthrough infections with Omicron after either 2 or 3 doses of the original vaccine to determine the impact of Omicron infection on immunity. We found that the exposure to Omicron spike by Omicron breakthrough infection of vaccinated individuals strongly enhanced neutralizing activity against Omicron BA1, but broadly augments immunity, including against Omicron BA2, previous SARS-CoV-2 variants of concern and even Omicron breakthrough infection mediated abroad B-cell recall primarily for expanded memory that recognizes antigen shared broadly by different variants rather than inducing new B cells against strictly Omicron-specific antigen. Taken together, these results suggest that despite possible imprinting of immune response by previous vaccination, the preformed B-cell memory can be refocused and quantitatively remodeled by exposure to spike proteins from different strains. We believe this may allow for the neutralization of variants that previously established neutralizing antibody response. The observation also may suggest that a vaccine adapted to the Omicron spike could reshape the B-cell memory repertoire and therefore may be more beneficial than an extended series of boosters with the existing vaccines directed against the original strain. We believe that the data may also suggest that exposure of individuals who have experience with ancestor strain vaccines to an Omicron spike mono vaccine could provide similar cross-train immunity. To be prepared for future challenges we may face with further involvement of the virus, we have been engaged since the approval of BNT162b2 in a very robust product research effort to explore various follow-on and novel next-generation vaccines to prevent COVID-19. These are currently in development and several projects may move into the clinic this year. We are evaluating mono and multivalent vaccines, T cell-enhancing approaches, and pan-coronavirus covering vaccine concepts. Our landscape research helps inform our product development strategy that currently focuses on responding to the need for vaccine adaptation due to the emergence of Omicron and its top lineages. Our clinical program evaluating the safety, tolerability, and immunogenicity of various variant-adaptive vaccines in multiple clinical trials is advanced. Emerging data from these trials will be reviewed and discussed with regulators in the coming weeks to determine the appropriate regulatory path forward for either monovariant or bivariant adapted vaccine product candidates. As a reminder, Slide 12 shows our comprehensive clinical response strategy to the Omicron variant. We are investigating different dose schedules of a monovarient Omicron adaptive vaccine, for example, in individuals aged 18 to 55 years while evaluating bivariant approaches as well. We expect data from these studies to be available in the coming weeks. While there is currently no regulatory consensus on the benefit of Omicron adapted vaccines, we anticipate regulatory developments as clinically meaningful data become available. As we await the data, we remain prepared to adapt our technology and manufacturing processes to ensure that our vaccine provides robust protection against current and emerging variants of COVID-19.

Jens Holstein, Chief Financial Officer

Thank you, Ozlem, and a warm welcome to those of you on the phone. I'll start my section by presenting the key highlights for the first quarter of 2022, which you can find on Slide 22. The first quarter of 2022 has been an extraordinary one, which also becomes visible by looking at our key financial highlights. Our total revenues reported for the first quarter of 2022 reached €6.4 billion, reflecting a record figure for the company since its inception. As a consequence of this top-line number, we ended the first quarter with an operating result of €4.8 billion and generated earnings per share on a fully diluted basis of €14.24. In respect of cash, we ended the first quarter of 2022 with €6.2 billion of cash and cash equivalents as well as trade receivables of around €12.7 billion. The trade receivables are mainly derived from our collaboration with Pfizer and many remained outstanding due to the contractual settlement of the gross profit share under the collaboration. From our outstanding trade receivables as of March 31, 2022, we had already collected €5.2 billion in cash by mid-April 2022, improving our cash and in turn, reducing our trade receivable position subsequent to the end of Q1 2022. Continuing with Slide 23, I want to point out how strong our first quarter in 2022 has been. As mentioned before, we have recognized approximately €6.4 billion of COVID-19 vaccine revenues during the first quarter of 2022. This has been the result of an increased order volume initially placed in late 2021 following the then-emerging Omicron variant. Let me give you some more details on our revenue stream. As a reminder, on our COVID-19 vaccine collaborations, territories have been allocated between us, Pfizer, and Fosun Pharma based on marketing and distribution. Our COVID-19 vaccine revenues included €4.6 billion revenues related to our share of gross profit from COVID-19 vaccine sales in the collaboration partners territories. These revenues already represent a net figure, meaning that we generate 100% gross margin of those revenues. As we have mentioned in the past and explained in more detail in our financial statements and filings with the SEC, our profit share is, to some extent, estimated based on preliminary data shared between our collaboration partner Pfizer and us. Our COVID-19 vaccine revenues during the first quarter of 2022 comprised approximately €1.2 billion in revenues from direct COVID-19 vaccine sales to customers in our territory, which is significantly driven by the orders we placed in late 2021 following the then-emerging Omicron variant. Also included in our COVID-19 vaccine revenues during the first quarter of 2022 were €0.6 billion from sales to our collaboration partners. Again, we started the year very strong, which we believe gives us a solid foundation for achieving our previously announced guidance for the 2022 financial year. We expect the following quarters to be lower than Q1 given the current situation of the pandemic.

Ryan Richardson, Chief Strategy Officer

Thank you, Jens. Turning to Slide 27 and our priorities for the remainder of the year. We continue to focus on the supply of our COVID-19 vaccine and the development of our pipeline of next-generation vaccines. Earlier this year, we announced a multiyear pandemic preparedness contract with the German government and discussions with other governments are underway. In oncology, we expect our first readout from a randomized Phase II trial in addition to data updates from our ongoing Phase I/II trial of BNT211, our CAR-T cell program for solid tumors. We continue to prepare for the initiation of multiple registrational trials across our pipeline in the next 12 months, and we'll provide further updates on those plans later in the year. In infectious diseases, we plan to initiate first-in-human clinical trials for 4 additional mRNA vaccine programs in 2022, in addition to building out our expanding preclinical portfolio. Additionally, we are accelerating the expansion of our platforms into new therapeutic areas, such as autoimmune disease, regenerative medicine, and cardiovascular disease and expect to make lead candidate selections for several programs. To support our focused execution against these goals, we are investing in our foundation, particularly in building out our digital and AI capabilities as well as our global development team to support further pipeline expansion, which we envision in the coming years.

Matthew Harrison, Analyst

I guess maybe if you could just give us a little bit more detail on your current thinking around what regulatory discussions you need to have in terms of boosters and what the regulatory pathway, especially in the U.S. is going to look like here. Is your expectation that you can just run a simple bridging study? Or might it be more complicated than that?

Ugur Sahin, CEO and Co-Founder

So I think I can take the question and maybe Ozlem can complement. With the regulatory path towards authorization of a variant adaptive vaccine is not clearly defined yet. We had a number of meetings with regulatory authorities, including the FDA and EMA, and they propose to see the data on monovalent vaccines and bivalent vaccines and would like to make the decision based on the data. As you might have heard, the FDA is planning a meeting at the end of June, where they indicated that they would provide clearer guidance about the vaccines preferred for the next season. A similar statement was made by the EMA, and both authorities seem to prefer an authorization of vaccines in the timeframe of August, September, October. So the process is ongoing. We are generating data for monovalent and different bivalent vaccines, including lower and higher doses and will have the data available for discussion with the authorities. I hope that answers the question.

Cory Kasimov, Analyst

I wanted to follow up on this general line of thinking, recognizing that there's data from various COVID programs anticipated over the coming weeks and an uncertain regulatory pathway you just discussed. I'm just curious as to your views on how you see the relative value proposition between an Omicron-specific booster compared with a bivalent one over both the short and longer term.

Ugur Sahin, CEO and Co-Founder

Yes. We refer to published data on antibody levels after Omicron 1 infection. This data indicates that in individuals who were previously vaccinated, we have generated findings for those who received our vaccine with either 2 or 3 doses, assessing the impact of Omicron exposure. The results show that exposure to Omicron BA1 not only increases antibody levels against the Omicron variant but also enhances responses against other variants, including Delta, Alpha, and the original wild-type variants. An Omicron exposure in vaccinated individuals significantly boosts both antibody responses. Meanwhile, other groups have observed similar effects. It's important to note that exposure to an Omicron infection, which we expect will also occur in vaccinated individuals, primarily enhances memory responses. Pre-established memory responses and naive immune responses may take additional months to develop naive B cells. We do not see a strong rationale for combining an Omicron vaccine with another vaccine at this moment. Ultimately, data is key, and we will be generating data in different individuals. We will compare the antibody neutralization levels not only against the previous Omicron variant but also against the newly emerging BA4 and BA5 variants, as well as earlier SARS-CoV-2 variants, regardless of their future impact.

Zhiqiang Shu, Analyst

Congrats on the strong quarter. I'd like to ask about the capital allocation. You have €19 billion on the balance sheet as of Q1. How do you think about spending that cash, in particular on the backdrop of the depressed biotech evaluation here thinking about BD and M&A opportunities? A quick one on the CLDN18.2 mRNA program. Given where your history on that target, how do you see that approach differentiated from the antibody approach?

Jens Holstein, Chief Financial Officer

Thanks very much for the question. Let me start, and then I'll pass it on to Ugur. We have reiterated the guidance, as you've seen, so €13 billion to €17 billion is the figure. After the first quarter, we feel very, very good about it. I mean the €6.4 billion that we have reported in revenues and the profitability supports that we confirm that guidance as stated at our year-end call. The main focus of our investments remain to invest in our research and development activities going forward. But as you remember, we also have announced that we will invest €1.5 billion in the share buyback program that we just had kick off very recently and that we also will give our shareholders that have stayed with us for a long time in the past €500 million of a dividend payment in the course of this year. Going forward in terms of M&A activities, et cetera, we have, of course, looked and continuously look into additions in terms of transactions that we can make, collaborations, and all kinds of things. That we are intending to proceed as we did in the past, but we can give you closer guidance on where and when we will invest and how much we got to see how things are evolving. But we feel good about the cash position. You've heard from me earlier that our cash position increased. We collected another €5.2 billion mid-April. So we're in the ballpark of around about €10 billion or above €10 billion at this point in time. So we feel good about our cash position, and that gives us the opportunity to invest money in the years to come. Ugur?

Sylke Maas, Vice President of Investor Relations and Strategy

Thank you for joining us today. We look forward to speaking with you in the future. Thank you, and bye-bye.